Surcharge on Income Tax – Latest Rates 2022

Surcharge on Income Tax – Latest Rates

Surcharge on Income Tax – Latest Rates. The surcharge is charged on the Income Tax and assessed if income is greater than Rs.50 Lakhs for Individuals and more than Rs.1 Crore for Companies.Different rates of Surcharge are applicable to different taxpayer categories and The current surcharge rates are as follows:

Individuals, HUF, Association of Persons, Body of Individuals, Artificial Judicial Persons

Level of IncomeSurcharge on Income Tax
A little less than the amount of.50 LakhsNil
Rs.50 Lakhs to Rs.1 Crore10%
Rs.1 Crore to Rs.2 Crores15%
Rs.2 Crores to Rs.5 Crores25%
More than 5 Crores of Rs.5 Crores37%

A 25% Surcharge as well as a 37% Surcharge will not be applicable in the following situations the following situations:

    • Dividend Income
    • The income taxable as short-term Capital Gains from the sale of shares/ mutual Funds in section 111A as well Long Time Capital Gains on Transfer of Shares or Mutual Funds under Section 112A.

Firms, Co-operative Societies and Local Authorities

Level of IncomeSurcharge on Income Tax
More than the amount of.1 CroresNil
More than the amount of.1 Crores12%

Domestic Company

Level of IncomeSurcharge on Income Tax
A little less than the amount of.1 CroresNil
Rs.1 Crores to Rs.10 Crores7%
More than the amount of.10 Crores12%

Foreign Company

Level of IncomeSurcharge on Income Tax
A little less than the amount of.1 CroresNil
Rs.1 Crores to Rs.10 Crores2%
More than 10 Crores of.10 Crores5%

Note:rate of surcharge of Income Taxfor foreign companies is lower than the Surcharges on Individuals since Domestic companies as well as Foreign companies are already charged an additional rate of income tax when compared to individuals.The rates of income tax are listed on this page – The Income Tax rates in India

Manner of Computation of Surcharge on Income Tax

After the calculation of the Income then the following step would be to determine the tax on income that will be imposed as per the following schedule

Category of TaxpayerIncome Tax Rate
Individuals & HUFAs per Income Tax Slab Rates
Firms and Local AuthoritiesFlat 30%
Domestic Company with a turnover less than Rs.250 CroreFlat 25%
Domestic company – turnover of more than Rs.250 CroreFlat 30%
Foreign CompanyFlat 40%

It is important to remember that the Surcharge is levied for the completetax incomeof the individual , and it isn’t a tax onamount of incomeof the person.The threshold for income over the amount of Rs.50 Lakhs/ Rs.1 Crore will only be used to verify whether the Surcharge is going to be imposed or not.Once the tax on income is calculated, the Surcharge would be levied to thistaxes on income.

In order to calculate of income, the total tax-exempt income from all categories after deductions from Chapter VI A andSection 80Cwill be considered.Examples of deductions that are allowed under Chapter VI-A and Section 80C as of the date of filing income taxes are the following:

  1. PPF Account
  2. Tax Saving Fixed Deposit
  3. Tax Saving Mutual Funds
  4. Senior Citizen Savings Scheme
  5. National Savings Certificate
  6. Contribution to National Pension Scheme
  7. Contribution to Pension Funds
  8. Payment of Medical Insurance Premium
  9. Payment to treat a specific diseases
  10. Donations

The list above is only indicative and there are many other deductions that are permitted under Section 80C.

Examples of Levy of Surcharge on Income Tax

The following examples were designed assuming that the taxpayer is an individual and thus Income Tax Slab Rates apply.

ParticularsTaxpayer ATaxpayer B
Total Taxable Income47,00,000Rs.53,00,000
Total Tax to be paid in accordance

with Slabs of Income Tax

Applicability of SurchargeNoYes
Surcharge @ 10%1,40,250
Total Tax owed (incl Surcharge)12,22,50015,42,750
Edu Cess @ 2% & SHEC @ 1%36,67546,282.50
Total tax Payable (after Edu Cess & SHEC)12,59,17515,89,033

Marginal Relief in the event of surcharge levy on Income Tax

To understand the concept behind Marginal Relief, we’ll present another instance.

Total Taxable Income50,00,00051,00,000
Taxes to be paid as per the Income Tax Slabs13,12,50013,42,500
Applicability of SurchargeNoYes
Surcharge @ 10%1,34,250
Total Tax owed (incl Surcharge)13,12,50014,76,750
Increase in Tax Liability (excl Cess)

due to Increase in Income


In the previous example where the amount earned is the amount of Rs.50 Lakhs the surcharge isn’t applicable.If the income grows by 1 Lakh to Rs.1 Lakh to Rs. 51 Lakhs,Surcharge on Income Taxwill be applicable.

While the income has only grown by one Lakh but the total tax due has been increased by 1,64,250 (i.e.14,76,750- 13,12,500).Since the total increase in tax due is greater than actual income growth over the threshold of Rs.50 Lakhs The notion of marginal relief could apply in this instance.

Marginal Relief is calculated in the following manner:

Increase in Tax (excl Cess)1,64,250
(14,76,750 – 13,12,500)
(Less)Income above Rs.50 Lakhs1,00,000
Marginal Relief64,250

This marginal relief is subtracted from the tax surcharge for Income Tax, and it could look like:

ParticularsIncome: 50 LakhsIncome: 51 Lakhs
Total Taxable Income50,00,00051,00,000
Total Tax to be paid according

to the Income Tax Slabs

Applicability of SurchargeNoYes
Surcharge @ 10%1,34,250
(Less) Marginal Relief65,15070,000
Total Tax owed (incl Surcharge)12,97,50014,12,500
Edu Cess @2% and SHEC @ 1%39,37542,375
Total Tax to be paid (incl Surcharge & Cess)13,51,87514,54,875


  1. How to e filing income tax India 2022 | www.income
  2. indiaincome tax calculator